First Data downside continues, GM, Ford spin their wheels; Trident exit-finance meeting ahead

By Paul Deckelman and Sara Rosenberg

New York, May 18 - First Data Corp.'s bonds continued to take a beating on Tuesday, pushed lower for a third consecutive session in the wake of disappointing quarterly numbers reported Friday by the Greenwood Village, Colo.-based electronic transactions processor.

Elsewhere, General Motors Corp.'s bonds - which had been seen mostly higher in very active trading on Monday after the top domestic carmaker reported its first quarterly profit since mid-2007 - shifted into reverse on Tuesday, although its losses on the day, suffered in line with an overall downturn Tuesday in the risk markets like equities and junk, were not too bad.

Just as GM domestic arch-rival Ford Motor Co.'s bonds had tagged along after GM on its upside ride on Monday, the Dearborn, Mich.-based Number-Two domestic car producer's bonds were mostly unchanged to lower on Tuesday in line with GM's pullback, apparently not helped very much by the news of a Moody's Investors Service across-the-board upgrade in its ratings.

Traders saw the gaming sector generally easier in line with the overall market, and saw no great pickup in the bonds of either Boyd Entertainment Corp. or MGM Mirage on the news that savvy hedge fund operator John Paulson took big positions in the stock of both Las Vegas-based casino companies during the first quarter.

In the bank debt market, participants awaited the Wednesday bank meeting that will officially kick off syndication on the bankrupt Trident Resources Corp.'s proposed $410 million term loan, the proceeds of which are to fund the Calgary, Alta.-based natural gas production company's coming emergence from Chapter 11 .

First Data faltering further

A trader said that "since the numbers came out last week," First Data Corp.'s bonds have been active - but getting shellacked.

"They were down a few points last week," he noted, "and there were a lot of trades today."

For instance, the 9 7/8% notes due 2015 "are down another couple of few points," falling to 82½ bid 83 offered from Monday levels around 84-85.

A market source at another shop called First Data's 10.55% notes due 2015 down nearly 3 points in active trading at 77½ bid., although the source saw the 9 7/8s at just over 85, up ¼ point.

The company's 11¼% notes due 2016 lost nearly 3 points to close at 731/2.

The first trader said that "volume is pretty high," marking it at third on the day's list of most active junk bonds.

On Friday, the company's bonds had plunged between 3 and 5 points - followed by smaller losses on Monday - after First Data reported a first-quarter net loss of $240 million, widening out from a $231 million loss in the prior year.

Adjusted EBITDA for the quarter was $424 million, down from $472 million for the first quarter of 2009.

Revenues for the quarter, however, were up 16% at $2.4 billion, versus $2.1 billion in the comparable period last year.

Also, as of March 31, the company had about $293 million outstanding under its revolving credit facility, compared to having nothing drawn at Dec. 31, 2009, and during the quarter, the company made $32.1 million of principal payments on its U.S. and euro term loans.

GM backs off

A trader saw General Motors Corp.'s benchmark 8 3/8% bonds due 2033 down 1½ points from prior levels in the 36 area, on reduced activity from the more than $140 million of the notes which were reported to have traded on the Trace system on Monday following the release of the carmaker's first-quarter numbers - its first profit in nearly three years.

Another trader saw the bonds go from pre-numbers levels of 34½ all the way up to a peak level of 37 on Monday before settling back in at 36 bid.

That 37 high bid was again seen on Tuesday, he said, "but then they backed off, a little since then" and were quoted going home at 351/2.

Yet another trader pegged them down a point on Tuesday at 35 bid, 36 offered.

The GM bonds had risen on Monday after GM reported first-quarter net income of $865 million, or $1.66 per share - the first quarterly profit GM had shown since the second quarter of 2007, when it earned $891 million.

The latest quarterly results represented a sharp turnaround from the car company's loss of $6 billion, or $9.78 per share, a year earlier, during the period when GM was readying itself for its bankruptcy filing. First-quarter revenue was $31.5 billion, a 40% jump from a year ago.

GM's performance also improved on a sequential basis from the $3.4 billion of red ink recorded in the fourth quarter of 2009 on revenues of $32.3 billion. That quarter was the company's first full quarter of operations out of bankruptcy protection, since GM spent a portion of the 2009 third quarter under the Chapter 11 umbrella.

GM attributed its improved performance to its having shed tens of billions of dollars of debt and other burdensome obligations after going under the bankruptcy scalpel last year, as well as to robust sales on some of its new vehicles, such as the Chevrolet Equinox, a small sport-utility vehicle, and the Buick LaCrosse luxury sedan.

Ford stays parked

A trader said that there seemed to be little or no reaction in Ford Motor Co.'s bonds to the news that the Dearborn, Mich.-based number-two carmaker's ratings had been lifted by Moody's Investors Service.

A trader saw the Ford 7.45% bonds due 2031 going out at 88 bid, after having gotten no higher than 89 earlier, "There was not a lot of trading in that one," he noted.

He also saw Ford's 7% notes due 2015 unchanged at 98¾ bid, 99 offered, saying the bonds had shown "no reaction" to the good ratings news, which was 'kind of weird."

Moody's lifted Ford's and affiliate Ford Motor Credit Co.'s ratings on Tuesday, citing Ford's "significantly improved operating and financial performance," as well as the possibility that Ford and Ford Credit might be able to undertake "meaningful deleveraging."

Gaming pushed lower

Apart from the autosphere, a trader said that the gaming sector was "probably down a good point to 1½ points today."

For instance, a market source saw Harrah's Operating Co. Inc.'s 10% notes due 2018 down nearly 2 points to finish at 81½ bid., while MGM Mirage's 6¾% notes due 2012 dropped more than 3 points to end at 93 bid. However, the source also saw the latter's 6 5/8% notes due 2015 as having firmed by a point to the 82 area.

And the first trader said that he "didn't see much trading in Boyd Gaming," even on the news that investment king John Paulson 's eponymous hedge fund had made major purchases of both Boyd's common stock and MGM's during the first quarter, according to newly released regulatory filings -- 40 million MGM shares and four million Boyd shares. At one point during the day, Boyd shares jumped by more than 12% on the news, although they ended up with a gain of around 4%, while MGM retreated by 2½%

He saw just one sizable trade in Boyd's 6¾% senior subordinated notes due 2014 at around 93 bid, down 2 points from their previous round-lot close, adding that "they're not the most active name."

The company's 7 1/8% sub notes due 2016 were the busiest credit in the company's capital structure, although most of the activity came in odd-lot trades. The trader called the notes unchanged at around 88-plus and "with the rest of the gaming market being down, that's probably up by default.

"Harrah's have been down by about a point and MGM's down the same thing."

Trident bank meeting on tap

In the bank loan market, price talk on Trident Resources Corp.'s proposed $410 million four-year term loan began making its way around the market ahead of the Wednesday bank meeting that will officially kick off syndication on the deal, according to sources.

The loan is being talked at Libor plus 950 bps with a 3% Libor floor and an original issue discount of 97, sources said.

In addition, the loan is non-callable for one year, then at 105 in year two, 104 in year three and 103 in year four.

Credit Suisse is the lead bank on the deal.

Proceeds from Trident Resources' term loan will be used to help fund its emergence from Chapter 11.

The company has already received court approval of the disclosure statement for its plan of reorganization, and the plan confirmation hearing is scheduled for June 15.

As part of the reorganization plan, the company is looking to do a $200 million equity rights offering and holders of 2006 credit agreement claims and 2007 credit agreement claims will be entitled to purchase that stock.

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